Metrobank v. Tan
REITERATIONFacts
The Antecedents: Petitioners Metropolitan Bank and Trust Company (Metrobank) and its Vice President Rogelio T. Uy initiated an extra-judicial foreclosure of mortgage on four parcels of land registered in the name of respondent Jose B. Tan, including one covered by Transfer Certificate of Title No. T-53267. The foreclosure sale was scheduled for April 17, 1998. Procedural History: On April 16, 1998, respondent spouses Jose B. Tan and Eliza Go Tan filed a complaint for removal of cloud on title and injunction against Metrobank and Uy, and the Sheriff of Misamis Oriental. They alleged that Eliza Go Tan did not consent to the mortgage and that the obligations secured by the mortgages had been fully paid. The Regional Trial Court (RTC) ruled in favor of the respondents, declaring the mortgages and foreclosure proceedings null and void, and absolving the spouses from financial liability. The Court of Appeals (CA) affirmed the RTC decision. The Petition: Metrobank and Uy filed a Petition for Review on Certiorari before the Supreme Court, assailing the CA's decision that absolved the respondents from liability for the principal obligation obtained by their son, Rey John Tan, and declared it fully paid.
Issue(s)
Whether the real estate mortgages annotated at the back of TCT No. T-53267 are null and void for lack of consent from respondent Eliza Go Tan. Whether the obligations secured by the mortgages have been fully paid. Whether the extra-judicial foreclosure proceedings and subsequent sale were valid.
Ruling
The Supreme Court granted the petition, set aside the appellate court's decision, and dismissed Civil Case No. 98-225. The extra-judicial foreclosure and subsequent sale of the mortgaged property were declared valid.
Ratio Decidendi
On the lack of consent from respondent Eliza Go Tan: The Court held that the claim of lack of consent from Eliza Go Tan to the mortgage covering TCT No. T-53267 was belied by her signature on the Real Estate Mortgage annotated as Entry No. 174644. Furthermore, even if her consent was lacking, it would not render the encumbrance void under Article 124 of the Family Code because proof was wanting that the property was conjugal, acquired during the marriage. The title stating the owner was "married to Eliza Go Tan" was merely descriptive of civil status and not proof of conjugal ownership. The presumption of conjugal property under Article 116 of the Family Code requires proof of acquisition during the marriage, which was not presented. On the claim of payment: The Court found the respondents' claim of payment, supported by debit memos and certifications, to be rebutted by Metrobank's presentation of credit memos. The explanation provided by petitioner Uy regarding the bank's practice of issuing credit and debit memos for loan renewals, to circumvent Bangko Sentral policies against non-renewed loans without payment, clarified that these entries were for accounting purposes and did not signify actual settlement of the original obligation. The debit memos represented "payment" only in book entries, not actual extinguishment of the debt. On the validity of the extra-judicial foreclosure and sale: Given that respondent Jose B. Tan, as a solidary co-debtor, signed the credit line agreements, promissory notes, and deeds of real estate mortgage, and in the absence of proof of forgery, these documents were upheld as genuine. The Court found no basis to declare the mortgages null and void due to lack of consent or payment. Consequently, the extra-judicial foreclosure proceedings and the subsequent sale of the mortgaged property were deemed valid.
Main Doctrine
The extra-judicial foreclosure and subsequent sale of mortgaged property are valid when the mortgagor, as a solidary co-debtor, signed the loan documents, and the property is not proven to be conjugal, thus not requiring the consent of the spouse for its encumbrance. Debit memos used for loan renewal, which involve crediting and debiting entries for accounting purposes without actual payment, do not extinguish the principal obligation.